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We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the...
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. Private debt reflects equilibrium trade between an impatient borrower, who faces an endogenous collateral constraint, and a … borrower's collateral constraint. We find that the optimal volatility of inflation is increasing in three key parameters: (i …
Persistent link: https://www.econbiz.de/10012466194
. Private debt reflects equilibrium trade between an impatient borrower, who faces an endogenous collateral constraint, and a … borrower's collateral constraint. We find that the optimal volatility of inflation is increasing in three key parameters: (i …
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